A sweet defeat?

Monday’s  news from New York puts the topic of corporate responsibility and food back on the agenda. One of Mayor Bloomberg’s flagship projects, the ban to sell soda or sugary drinks in larger than 16oz (0.47 litres) servings was blocked by the Manhattan Supreme Court – just one day before it was supposed to go into effect.

It puts an interesting spin on the debate on corporate responsibility of the food industry, which was a recent topic on our blog. Former business tycoon Bloomberg - in a rather non-business friendly manner – is obviously a strong believer in harsh, imperative, top-down governmental regulation when it comes to responsible business behavior. Whether this is just because he knows business in and out is an interesting question...

Be that as it may, resorting to strict regulation in this area has always been more of a European approach – as the fallout from the horse meat scandal in the EU now also seems to suggest. Even more interesting it is now to see how differently things work out in New York. First of all, the link between the amounts of sugar in Coke, Pepsi or Dr Pepper and the ongoing obesity epidemic in the US is more than obvious. Sugar contents are clearly labeled and therefore – unlike the horse meat scandal – it has little to do with the fact that consumers are misled or otherwise shortchanged.

The unsurprising news here is that the court case was brought up by the beverage industry. For them the judgment provides ‘a sigh of relief’, as one spokesman put it. More surprising though is the fact the ban - a sentence brought down by an otherwise liberal/left leaning judge - was very much opposed by another group of rather unusual suspects: African American and Hispanic community organizations.

In some ways, this is a rather preposterous occurrence. Exactly the demographics which are hardest hit by obesity are the ones opposed to the ban (and in other US states) also against taxation and other measures to rein in on consumption behavior. Their arguments, as a lengthy analysis in The Times this week surfaced, is mostly about economic and ethical issues: they find those measures a direct discrimination of minority consumption patterns, of minority businesses (like small corner shops and bodegas) and a general overreach of government into the nitty gritty of individual decision making.

Interestingly, the soft drinks industry has discovered this ally and heavily sponsors these groups – all under the cloak of ‘community engagement’, ‘partnership’ or ‘diversity stewardship’. Of course the industry denies that their funding of these groups influences their stand on the issue; and in some ways that is credible. But we can also say that the corporate interest to back such groups on the issue of regulating sugary drinks aligns perfectly with the agenda of minority groups – which makes them prime candidates for fighting together on the same issue.

In some ways then the approach taken by PepsiCo, Coca Cola and other soft drinks companies is the epitome of cynicism; or as Kant would put it, just using people as a means to an end. But then we knew that many big corporations, despite their engagement in CSR, Citizenship or Sustainability, are still by their very set-up self-interested predators.

The New York story of this week though also shows the limits of governments in encouraging responsible corporate behavior. As one community leader put it:

“I don’t think we move the needle by legislating what people ultimately eat or drink. [,,,] Our experience has been that you educate folks, empower folks — meet them where they are, basically.”

At the end of the day, it is about changing long entrenched consumption patterns and address blatant ignorance about our food, its ingredients and its impact on our health. All these things, however, have been shaped in no small way by those very corporations for a long time. Just think of their advertising budgets or their efforts to sell their products in schools to children, just to rope them into their products and consumption habits from early age.

In some ways this leads back to Bloomberg himself. He made his billions creating an information platform which has perfected the performance measures and ability of investors to learn about the finanicial performance of companies. As long as we do not change these incentives which drive the entire system, however harsh measures which are just targeting the symptoms are not going to work. In as much one can hardly argue with outlawing to sell sugary drinks by the buckets to vulnerable consumers as a good thing – the defeat of the measures in court shows that a superficial cure of the system of food production is not the solution. In that sense this week’s ruling may also be a blessing in disguise.

Picture by The Seafarer, reproduced under the Creative Commons License.

Climate change and the bottom line ... even in Canada?

Canada is no frontrunner in tackling climate change. In fact, in many respects, it is quite the reverse. So we were pleased to see the release of WWF Canada's report "Rethink Business How Addressing Climate Change Can Improve The Bottom Line" which looks at what some of the country's leading companies are doing to address climate change in their organizations.In fact we were so pleased that Andy agreed to write the forword for the report. Here's a sample of what he says:

"For Canadian business, the threat of climate change looms large. Nonetheless, despite its reputation as a clean, eco-loving country of verdant forestsand sparkling rivers, Canada remains a major laggard in climate protection. According to official statistics, it has one of the highest rates of per capita CO2 emissions of any country in the world. The conditions for a major change in this situation are hardly propitious either. The  economy is wedded to fossil fuels, and the federal government has been reluctant to tackle the problem of climate change through national regulation. It is clear that we need to look elsewhere for meaningful change.

Hotels, soft drinks, information technology, and paper – these might not be the obvious places to look for leadership in climate solutions in the country. However, this report demonstrates that these are indeed some of the industries where a quiet Canadian revolution is beginning to take shape. Each of the companies featured here – Fairmont Hotels & Resorts, The Coca-Cola Company, Hewlett-Packard Canada, and Catalyst Paper – have demonstrated a willingness to take a step beyond their industry rivals. They have all made an  impressive commitment to reduce absolute levels of greenhouse gas emissions. And they have each  demonstrated in their own way that doing so can also make good commercial sense. Their performance is far from perfect. But these companies can all point to significant progress that sets a benchmark for others to follow."

So the bottom line is that some of these leaders are doing some great stuff .... but there's still a long, long way to go, especially considering that these are in front of many of their competitors. If you want to read more about what these companies have done and the challenges they've faced, the whole report is downloadable for free, or you can also just download excerpts. One of the most interesting aspects for us though is that the report is based on a business collaboration implemented by WWF called Climate Savers that seeks to combine the efforts of the NGO and its corporate members to achieve meaninful carbon reductions. As Andy says in the foreword:

"The decision to take a lead on climate change is not taken lightly. WWF’s Climate Savers program, though, is a great example of what can be achieved when businesses and non-profit organizations decide to work together to achieve common goals. Such partnerships are tough to get right. Different priorities, a clash of  values, alternative ways of seeing the world: these can all derail the best-laid plans for collaboration. But  WWF Climate Savers program works because it offers a framework for action that is animated by a set of clearly articulated goals....The Climate Savers program is not just about targets, though. What Climate Savers does is provide support, advice, evaluation, and perhaps most importantly, a forum for the exchange of ideas and the communication of progress, that enables the program participants to better achieve
their goals."

We're not saying it's a panacea for tackling climate change, but challenges this big require collaborative action. And they demand a willingness to open up. And that's exactly what the Climate Savers initiative gets business in the habit of doing. It's a pity that the only way they seem able to do this is by appealing to business self-interest (as in "how addressing climate change can improve the bottom line"), but sure, there is a necessity for voluntary climate action to make some kind of commercial sense ... its just not the whole story. But if you're reading a blog about corporate responsibility, you probably didn't need us totell you that.

Here’s to Communism!

A while ago we blogged about the bizarre usages of the term ‘socialism’ in North America. But in an attempt to be fair, we have to say they are not the only ones. Today’s blog comes from the Indian state of Kerala, where we find an equally fudged notion of, this time, ‘communism’, albeit in a slightly different way.

Kerala, back in 1957, was the first ever state in the world to freely and democratically elect, yes, a communist government. The communists have been in power there for most of the time ever since. On closer examination though, it is not really communist: Kerala, by and large, still is basically part of capitalist and free market system, most notably with private property of the means of production. So this is the slight misnomer then, it’s more a government strongly committed to social-democratic policies.

This said, however, it is fairly impressive to see the track record of those ‘communists’. Kerala is a success story, ‘the most socially advanced state in India’ according to Nobel Laureate Amartya Sen. Land reform, infrastructure investment, good health care and education systems have put Kerala at the top of most developing countries globally. Its literacy rate of 91% is the highest in the developing world and its life expectancy (73 years) is 10 years higher than the Indian average. Infant mortality rates are a fifth of the entire Indian subcontinent.

So the Kerala story – labels aside – is a success story. And it shows that it is possible to change social and economic conditions with policies which are geared towards the ‘greatest good of the greatest number’, see Chapter 2 in Crane&Matten. In this context it is also illuminating to see that Kerala boasts a vibrant, powerful and active civil society movement. Our readers will recollect that we have an Ethics in Action box on Coca Cola’s fate in Kerala some years ago in Chapter 11 of our book. It was here, where a global protest movement started. And as we are happy to point out, it was here, where some of the most innovative policies of a multinational company with regard to water management were triggered. In some ways, Coca Cola benefitted from the vibrant civil society and NGO scene in Kerala…


All said then, it is no surprise that the ‘communism’ label has deterred investment by corporations and Kerala suffers from it. The only major source of extra business opportunities then is tourism. Crane&Matten are more than happy to hasten to rescue here…

World's stupidest Gaza boycotts?

As a follow-up to our last post, this interesting blog entry from the folks at Foreign Policy may raise some laughs .. or a few hackles. The comments are interesting too. Thanks to Kejia for alerting us to this one...


The world's stupidest Gaza boycotts

Predictably, Israel's continued assault in Gaza has led to renewed calls to boycott Israeli products. Everyone has a right to express their political views any way they see fit, but it's safe to say that some proposed boycotts are less productive than others.

More than 2,000 restaurants in Malaysia have removed coca-cola because of the United States' support of Israel. The Malaysian Muslim Consumers Association has also pushed for boycotts of Starbucks, Colgate, McDonald's and Maybelline in order "to protest Zionist cruelty."

Coca-Cola is a particularly odd target since it's bottled and sold locally by a Malaysian-owned company, so the activists are really just hurting their own country's economy. (I remember from college that students campaigning for a campus boycott against "killer coke's" Latin American business practices faced the same problem.) It's also ironic given that the company was once criticized as anti-Semitic because of its reluctance to break an Arab League boycott by selling coke in Israel.

Post continues ....

A view from Africa on corporate citizenship

We are writing this blog entry on the long trip back from a fascinating trip to South Africa. We were there mainly to participate in a big international conference organized by the International Society of Business, Economics and Ethics (ISBEE) – a global network of organizations and scholarly societies dedicated to business ethics. The conference only happens every four years, and brings together people from every continent (it’s not for nothing that it’s called the Olympics of Business Ethics!), and it’s an exciting place to be to talk and learn about what’s happening across the globe.

We were there to launch 2 of our new books, to run some professional development workshops, but most of all, to talk about our work on corporations and citizenship. And the conference, and South Africa in particular, turned out to be a great location to do this. Questions and debates about the social and political roles and responsibilities of corporations are fundamental to countries like South Africa, where it is companies that are charged with the responsibility for implementing black economic empowerment legislation through their human resource programs. Companies are also a key player in the provision of various public goods, such as water, health, and education. For instance, on one of our trips outside Cape Town we passed a special needs skills school sponsored by the local Coca-cola bottler (see photo) that demonstrates just a little of how deeply embedded corporations are in traditionally ‘non-business’ activities.

Such issues also swirled in and out of the several of the keynote speeches at the conference. We heard an executive from the mining company Anglo American discuss at length their responsibility to ‘be a healthcare provider’ and ‘guarantee the human rights’ of South Africans through their impressive HIV/AIDS program. We heard the manager of the charitable foundation of the pharmaceutical company Abbott Laboratories argue that the legitimacy of their African health initiatives would be threatened by incorporating business goals into their social programmes. And Henk van Luijk, one of the original European pioneers in the business ethics field, and a founder of ISBEE, explicitly identified the political role of the corporation as one of the key challenges facing business ethics and CSR in the future.

So when we came to present on the final morning of the conference, rather than the usual smattering of diehard conference junkies that make it to the last paper sessions of such a long conference, we were greeted with a large, eager crowd that was fully primed for a serious discussion about corporations, politics, and citizenship. Now we’ve been presenting our ideas on all this for a good few years, refining and sharpening as we’ve gone along, but this was definitely one of our favorite, and most productive, conference presentations for a long time.

In what was an unusual occurrence for us, most of the packed room was in agreement that we had to develop better conceptual and practical tools to address the political dimensions of business. In other occasions though, people’s discomfort with the whole idea of business playing a role in politics has meant that they have done their best to shoot the messengers. In one of our recent papers, we discussed this fear in terms of ‘monster theory’ which we had a little fun with.

But this time, corporations and politics were clearly on the agenda amongst our audience. However, not so many of them were convinced that ideas like citizenship, and corporate citizenship specifically, were the best way forward. They could have a point, but at the moment, it is certainly emerging as one important piece of the puzzle. And what we need is more people engaging in the debate about corporations and politics, and eventually devising serious alternatives, rather than just wishing it would all just disappear. In our conference presentation we worked with our audience to think through some potential routes forward for doing this. And in our many conversations both inside and outside the conference itself, we learned a lot about some of the challenges that we face. So whichever way you look at it, spending time in South Africa definitely got us thinking… (oh, and having a little fun too, as you can see in the picture above).

Giving olympic sponsors a sporting chance?

For those of you that have been following our entries on the upcoming Beijing Olympics, we thought this article, "Navigating Olympic Sponsorship: Marketing Your Brand without Alienating the World" from the Wharton School of the University of Pennsylvania might be of interest (thanks to Elizabeth Watson for alerting us to this one). It gives a good overview of some of the issues that the Olympics' corporate sponsors will have to juggle in the face of the political protests. As one of the Wharton professors comments in the article:

"Corporations that want to sponsor the Games have to navigate the political undercurrents ... I wouldn't be surprised if many underestimated the potential for [the Games] to turn into an international issue and thought instead, 'We can reach a billion eyeballs; the political stuff will just go away. But politics isn't about money. It's about hope and fear and common purpose and identity."

As the article rightly says, it is hardly surprising that the Games are a political focal point, and indeed, they often have been over the years. The difference now though is that the politics are far more embedded in economics than they once were. What with China being such an important trading partner for many corproations, not to mention the huge sponsorship deals involved, the incentives to avoid rocking the boat are there for all to see.

As we've already said, it's a little too early to tell what the consequences are going to be for the corporate sponsors, but one potential outcome mooted in the Wharton article may just be rattling a few nerves at Coca Cola, McDonalds, Volkswagon and the other sponsors. As anyone who has visited China will be aware, broadcasters in the PRC have a definite proclivity to black-out broadcasts at the slightest suggestion of anything controversial. After spending billions on sponsorship, the last thing the multinationals will want to see is a blank screen. Well, that's not counting the potential for "an unlucky photo or video clip of, say, Chinese police cracking a protester over the head in Beijing with a General Electric, Johnson & Johnson or Visa logo in the background". Unlucky? Or it just part and parcel of the heady brew of business, politics and sport?

The torched journey of the torch

We have talked about the Olympics in Beijing 2008 in an earlier blog. So here we are again. It teaches us some fascinating lessons about the shift in politics globally.

After massive protests which partly stopped the journey of the Olympic torch in Paris yesterday, we are awaiting its arrival in San Francisco today. Pictures on TV don’t promise an exactly smooth further ride. With Richard Gere and Desmond Tutu among the protesters this will be another high profile spotlight on the fact that China – despite being an accepted player in the global economic community – by many is still considered a pariah in terms of democracy and human rights.

It is interesting to watch into which arena these inherently political issues have waned. Fair enough, Nicolas Sarkozy and Angela Merkel as heads of two Western governments have cancelled their participation in the opening ceremony. A symbolic gesture of distancing from what some commentators see as re-run of the 1936 Olympics. Back then, another regime instrumentalized the Olympics for gaining international legitimacy.

But so far, most democratic leaders in the West have shied away from raising louder voices, let alone action. Also precious little so far to hear about Chinese ‘flame attendants’, ripping off Tibetan headbands from torchbearers or wrestling down protestors. These ‘men in blue’, according the BBC, ‘in fact, the cream of China’s armed police’, so far happily did their work on the streets of Athens, London or Paris.

So, the loudest and clearest voices come from the streets all around the globe. They are led by activists and citizens who voice their anger and concern. Their tactics are well known: linking their cause to high-profile events provides visibility to an otherwise neglected issue. Greenpeace, as we discuss in Case 10 in the book, has used this tactic successfully at the Sydney 2000 Olympics in introducing the Greenfreeze technology.

It will be exciting to watch how these dynamics will further unfold. It is highly likely that civil society protests will continue. From a business ethics perspective, the jury is out whether all the companies sponsoring the Olympics are in fact in for a major PR disaster. Executives at Coca Cola, Volkswagen or Adidas have a tricky nettle to grasp.

Not only is the value and integrity of their global brand at stake. Moreover, they all have elaborate policies on CSR, ethics or sustainability. Just as we speak, they might be well advised to revisit their take on the Beijing Olympics. We hope they have enough managers literate in business ethics to help them with this task.

I'd like to teach the world to .... eat?!

Probably the title of this post is lost on some of our younger readers, but it refers to a classic ad by Coca-Cola, where a multicultural bunch of young people with bad haircuts (well, it was the 70s) sing about peace, love and understanding in the guise of selling more soda, all to the tune of "I'd like to teach the world to sing". Beautiful. I don't know about you, but it gives Crane and Matten an urge to go grab a couple of cold ones from the cafe here just thinking about how much our friends at Coke have contributed to racial understanding and that great one-world vibe. Well, not counting the record breaking court fine for racial descrimination in 2000, their problems with water use in India ... oh and the fact that here we have a Pepsi-only exclusive concession!

But anyway, we digress. The point of the post is not actually to talk about Coca Cola, but about one of the other great giants of American global branding - McDonald's. Anyone that has read our Business Ethics textbook will know that we always like to see what's going on in the world of Ronald McDonald - there is always a meaty story or two to get our teeth into (if you'll excuse the pun). This time round, we are curious to explore what exactly it is that McDonald's hopes to teach the world. Probably not, as in the Coke ad, to teach the world to sing, but one thing is for certain, everyone's favourite fast food company is not content to leave the teaching to mere teachers.

First up, from this side of the Atlantic, news that McDonald's is pulling its ill-fated sponsorship of elementary school report cards in Florida (thanks to Ryan for pointing that one out to us). Yes, that's right, McDonald's was giving away happy meals as a reward for good grades, complete with a beaming picture of Ronald McDonald holding up the golden arches on the report card envelope. You couldn't make this stuff up. Critics rightly questioned whether McDonald's was sidestepping its own pledge not to advertise in elementary schools, whilst the firm countered that this was "not advertising". Oh, right, well that's OK then.

Only last week, we blogged about some of the issues around food companies self regulating their marketing to children, and this looks like a particuarly good example of where a stronger system is necessary to prevent companies breaking their own rules. As it turns out, the issue caused such a stink that the initiative was quickly dropped by McDonald's, who probably couldn't believe all the fuss since they had just taken over from Pizza Hut who had a similar promotion on report-card jackets for about 10 years. Perhaps the real question is how Pizza Hut managed to get away with it so long, but that's another story.

Not content with providing "incentives" to American kids for getting A's, from the other side of the Atlantic comes news that McDonald's is going to be offering high school qualifications to its staff in the UK. With the British Government looking to provide more practically oriented qualifications, as well as hoping to leverage some of the massive investment in company training into nationally recognized skills awards, McDonald's is one of three UK companies slated to run pilot programmes that will result in A' level qualifications for eligible staff.

Given that even the British Prime Minister himself, Gordon Brown, has said that the McDonald's A' level will be a "tough course", we clearly should have nothing to worry about. After all, he expects them to be ultimately suitable for entry into university. But even though we don't have a problem at all with complementing school education with practical training, there are clearly dangers here in equating a rather narrow company specific training course - however good it may be - with a decent high school education. Corporations quite naturally train people to work in the company's best interests, and unless students are also given the tools to put this training into a wider context, there is not much prospect for developing well rounded educated individuals. It is not that a McDonald's training scheme couldn't be part of this, but it would need to be effectively and imaginatively embedded into the curriculum to ensure that students are not short-changed by a government simply contracting out the educational process to "socially responsible" corporations. Maybe they should offer some free happy meals to anyone who makes a good suggestion for how to do this....